U.S. officials investigating a secret $9 million trust have sent this message to the Nassau lawyer who controls the funds: “Give us our money back!”
A U.S. investigator sent the message during an exclusive telephone interview with Punch on the $9 million Cardinal Trust fund row.
The Nevis-registered trust is controlled by White Knight lawyer Michael Paton, a senior partner of Lennox Paton & Co.
Investigators of the New Jersey Attorney General’s Office along with FBI agents are probing Paton’s handling of Cardinal Trust.
Paton has ignored a U.S. court ruling that the money in Cardinal should be returned to the New Jersey Attorney General’s Office as it was stolen by jailed U.S. broker Robert Brennan, 61, in a $75 million scam. Furthermore, U.S. officials claim Paton is also ignoring a court order that handed over ownership of Cardinal Trust to the New Jersey A/G Office.
Now U.S. officials also fear that an alleged shortfall in the money in Cardinal may be linked to a $30 million “Prime Bank” or pyramid scam run by Erie Resteiner, a former resident of ﾠLyford Cay, Nassau.
German Resteiner is awaiting trial in the U.S. He was extradited to the U.S. from Singapore in 2004 after fleeing Nassau. Resteiner has also been accused of giving Grenada PM Keith Mitchell $500,000 to win political favours. Mitchell has denied the allegation. Resteiner also bought Czech-born fugitive Viktor Koseny’s $US million “Dr Chvatik” home in Lyford Cay. But Kozeny – now in Fox Hill Prison awaiting his U.S. extradition case – got the house back after Resteiner defaulted on payments.
In his affidavit, Brennan alleged that Michael Paton told him in late 1999 that money from Cardinal was put into an investment contract recommended by his father, Lennox Paton. Brennan further alleged that Michael Paton seemed to be using the “absurd explanation” of the Lennox Paton-recommended investment contract to justify what Brennan said was a shortfall of several million dollars in Cardinal.
At the time, Lennox Paton was advising rich residents of Lyford Cay to invest in the Restelner venture, which turned out to be a $30 million scam: Lennox Paton himself reportedly lost $3 million in the Resteiner seam. Other Lyford Cay residents approached in the Resteiner venture included lrving Gould, the late founder of Compaq Computers, and a son of Peter Cadbury, of Cadburys Chocolates.
Investigators now feel Michael Paton should tell them whether or not any of Cardinal’s money was invested in the Resteiner scam through Lennox Paton’s alleged recommended investment contract. Lennox Paton has allegedly said he only invested his personal money in the Resteiner venture.
As Chairman of the Bahamas Financlal Services Board, Michael Paton has a special duty to comply with U.S. investigators regarding stolen money in trusts. He is also obliged to assist U.S. trust fund investigators under the Mutual Legal Assistance Treaty.
Mr. Paton has tried to give the impression that the Punch’s story on him and the $9 miilion missing money stash is not true. ﾠThe Punch, however, says Paton is “talking rubbish!
“His reply in the Daily Dinosaur Tribune was nonsense,” the tabloid printed in today’s edition. Paton told the paper that the millions of dollars in Cardinal Trust, which he controls, was clean cash when he took over Cardinal in 1998.
Paton, a senior partner of Lennox Paton & Co, claims that he checked out the original owner of Cardinal Trust, jailed U.S. crook and con-man Robert Brennan. And Paton said those checks revealed Brennan had a clean track record and was worth $100 million when Cardinal Trust was set up in 1994.
More Rubbish says the Punch! Brennan has a long history of crooked and fraudulent deals dating back to 1974! So much for Paton’s so-called checks on Brennan! And Paton is conveniently forgetting to explain that, since 1998, a U.S. court of law has proved and ruled that the $9 million in Cardinal Trust was STOLEN in a $75 million scam by rip-off artist Brennan, 61, from clients of his now-closed First Jersey Securities.
Brennan admitted he put the money in Cardinal Trust to hide it from creditors. The trial also revealed that Brennan had $42 million in stolen money stashed in secret trusts all over the world! What’s more, Brennan and his two sons, the beneficaries of the Trust, have all signed over all rights to the Trust to the Attorney General of New Jersey.
So, now the A/G of New Jersey “owns” the Trust, having been assigned Cardinal by its original American-citizen owners. And U.S. officials have asked Paton repeatedly since January 2002 to hand over the Trust. They want to give the money back to clients, many of whom lost their life-savings in of Brennan’s scam.
The Punch says Paton has a moral, professional and ethical duty to return the Trust money. Under new financial laws and agreements, once a U.S. investigator can show that money was stolen or ill-gotten, the controller of a secret offshore bank account or trust is obliged to allow the investigator access to the Trust.
As as Chairman of the Bahamas Financial Services Board, Paton has a special duty to comply with the new financial laws. Instead, Paton is hiding behind the letter of the law. He is running the risk of being in contempt of a U.S. court order. And he is giving the impression that he is obstructing U.S. justice.
Paton claims that Cardinal Trust falls under the laws of Nevis, in the West Indies, where the Trust is registered. And therefore, he says, the U.S. court ruling and findings do not apply to Cardinal. Not surprisingly, U.S. officials feel Paton is wrongfully withholding Trust money while failing to give a satisfactory accounting of Cardinal. Bids by the U.S. to gain access to the trust were thrown out of a Nevis court on a technicality. Paton claims that the U.S. owes $1.8 million in costs for the case. An expert has advised U.S. officials that the $1.8 million costs is “grossly overstated”.
It is the opinion of the Punch that, in view of the U.S. court ruling that the Cardinal money was stolen, Paton should return the money to U.S. officials, who now own the Trust. Paton also claimed that Brennan was jailed in the U.S. for hiding $500,000 in cash and cashing in $500,000 in casino chips after filing for bankruptcy.
Brennan’s offences were far worse than that. He was jailed in the U.S. for nine years for bankruptcy fraud and the money-laundering of millions of stolen dollars. And he received another three years in jail for criminal contempt charges for failing to obey a court order.
Source: ﾠThe Punch – Nassau, Bahamas
